How business leaders communicate during times of crisis can create clarity, build resilience, and catalyse positive change on the way to recovery. INTHEBLACK taps into lessons learned from CPA Australia’s External Reporting Centre of Excellence on how to navigate the next stage.
By Dr Jana Schmitz and Ram Subramanian
The COVID-19 crisis is a world-changing event that will have lasting effects on how we live and work. While the timing of its impact on different countries has varied as it moves across the globe, nowhere has been untouched.
The pandemic has turned our normal lives on its head: at least for the time being, we are no longer able to work and socialise as we used to.
INTHEBLACK spoke to some of CPA Australia’s External Reporting Centre of Excellence members living and working in lockdown from locations across the world, about how they were managing their staff, clients and other stakeholders, and what lessons can be applied as leaders navigate the way to recovery.
Leadership approach and communication
COVID-19’s speed and scale bred uncertainty and emotional disruption. Once the initial shock was absorbed, it became crucial for business leaders, not only to manage the impact on their business, but also to acknowledge and address the impact on their staff.
Business leaders are uniquely positioned to serve as influential role models. How they communicate during this time of crisis can create clarity, build resilience, and catalyse positive change.
“A rapid and direct communication approach is key,” says Shaun Steenkamp, finance partner at National Bank of Australia [NAB].
“The NAB leadership team provides information regarding COVID-19 responses directly to everyone at the same time. The traditional trickle-down approach was set aside to increase efficiency and transparency.
“Updates were initially provided twice daily at the start of the crisis and then scaled back over time as the initial response was put into action.”
Frequent and direct communication, adds Steenkamp, has built a lot of trust among employees and makes them feel more connected. The trust built throughout the crisis will go a long way towards building and protecting strong relationships between employer and employee, which will be important in navigating the challenges arising from the crisis.
It is not just leaders’ communications that is key at this time, adds Andrew Marks, audit director at William Buck, Melbourne, but also communication among teams.
“At William Buck we hold weekly firm Skype meetings with various people providing updates to keep everybody in the loop about what’s going on within the firm. In addition, we also have individual team meetings on a regular basis.”
Marks adds that because employees’ information needs evolve differently in a crisis, it is essential to “listen in” to what concerns and information needs individual teams have.
Peter Kerr, executive director of the Assurance Audit Service Group at the Australian National Audit Office (ANAO), adds that at the ANAO, throughout the week, executive and senior managers check in with their teams.
“How are they handling things? How are they coping? What’s their mental health situation? [These] are questions that need to be addressed.”
Steenkamp states that employees’ wellbeing is being challenged by disrupted work-life balances.
“Before COVID-19, in the morning, after you got up, you quickly checked your phone but then put it away, hopped on the train, read a book, listened to music, relaxed before going to the office – but nowadays straight after breakfast you open your laptop and start working. There are benefits to that – your commute time is only five minutes – but it also means that you are so close to the office now.”
That, adds Steenkamp, often leads to employees working long hours – starting very early and finishing later than usual. “For many, this is not sustainable.”
Steenkamp argues that leaders should be considerate as to how their work has flow-on impacts on co-workers: “The last thing you should do, as a leader is at 7am in the morning while you are having breakfast, to fire off emails that trigger work across the organisation that affects everyone else.”
Leaders, says Steenkamp, need to be aware that their behaviour and actions impact on other peoples’ work-life balance.
“In the finance profession, but also in general, leaders have the ability to trigger an absolute tonne of work down the line.”
To this, Nick Walker, audit partner at HLB Mann Judd, adds that as an audit partner he makes sure he does not send an avalanche of emails outside office hours.
“I don’t send late-night emails because I know how disturbing it can be when you spend time with your family at night and then receive work emails that may or may not be important.
“These days, emails do not necessarily come in between 9 and 5. People feel the need to be available 24 hours, seven days a week. That is exhausting – mentally and physically.”
Supporting employees’ mental wellbeing is another crucial ingredient for good leadership. Initiatives taken by William Buck, Melbourne, to help employees manage their day include online meditation and yoga classes facilitated by qualified instructors.
“Qualified meditation and yoga instructors offer virtual classes throughout the week, which have been very well-received by our staff,” says Marks. Activities to foster employees’ wellbeing are also held by the ANAO.
“To help our staff to stay connected and to keep the social engagement alive, we organise little competitions and give prizes to people,” explains Kerr. “Funny that” and “best photo” competitions are only some of the virtual social gatherings the ANAO organises.
Member engagement with stakeholders
“It is not only about engaging with employees,” says Len Jui, KPMG audit partner and member of the International Auditing and Assurance Standards Board (IAASB), emphasising that “listening to and understanding other stakeholders, and creating openings for dialogue, are essential steps to take during this crisis”.
Jui explains that audit standard-setters such as the IAASB are adjusting their project agendas, acknowledging that their stakeholders are currently operating at full capacity to address COVID-19 related issues impacting on their organisations.
“Our stakeholders, such as CPA Australia and the Auditing and Assurance Standards Board [AUASB], may not have the capacity to provide detailed and thoughtful comments to our consultations.”
In other words, the standard-setting process, which requires responses in the form of comments from various stakeholder groups on Exposure Drafts (EDs), has slowed down.
“The commentary period typically is 120 days, but now due to COVID-19 people find it challenging to devote time to standard-setting. Therefore, we are currently examining whether we should give 180 days (a six-month period) to comment on major EDs. However, this is becoming a challenge in terms of standard-setting.”
To foster the ongoing conversations between the IAASB and stakeholders, Jui says that the IAASB is considering organising a series of webinars to explain ED content and encourage people to provide comments.
“That would increase the efficiency of the process as it would allow stakeholders to ask their questions, insert their comments and concerns into the chat box and speak to different board members.”
Besides the IAASB, other standard setters have also adjusted their stakeholder outreach activities. The International Accounting Standards Board (IASB) offers live webinar sessions to introduce and seek feedback from stakeholders on different EDs.
By offering morning and afternoon sessions, the IASB manages to accommodate stakeholders in different time zones around the world. Further, the Malaysian Accounting Standards Board (MASB), Accounting Professional and Ethical Standards Board (APESB) and AUASB have all held virtual webinars or roundtables to receive comments on specific standards.
Member engagement with clients
Walker adds that the need for being sensitive in terms of meeting stakeholders’ expectations does also apply to clients.
“You may have clients who are impacted and are in financial trouble. You need to be very transparent and flexible with such clients.”
While being flexible, members need to be wary of putting their clients before themselves and their own businesses. Many members in public practice have been burning the midnight oil to address clients’ needs while providing pro bono support as many of their clients’ businesses struggle.
While they meet clients’ needs in the short term, it is not sustainable in the long term for those members’ health or the health of their practice.
Adding to this, Mark Hucklesby, partner and national technical director, audit, at Grant Thornton New Zealand, says that COVID-19 has – to an extent – intensified the audit-client relationship.
“We have had more contact with some clients, especially small businesses, during the COVID-19 lockdown than before. They have been reaching out … to seek advice for preparing their documents, to rearrange their banking arrangements etc.”
Productivity increase or decrease? A double-edged sword
Working remotely during COVID-19 can lead to potential inefficiencies, with some employers eager to get their staff back in the office so they can better monitor productivity.
Inefficiencies do not necessarily have to be the case, says Jessie Wong, chair of CPA Australia’s External Reporting Centre of Excellence and audit partner at KPMG China.
“We observed a behavioural change in addressing problems,” says Wong. “It is my experience that on virtual calls people quickly adopt a problem-solving mode. They adopt the view of ‘what’s the problem, how do we solve this, let’s get over with this efficiently’. That’s positive about moving to the virtual world of working.”
The more solution-centric approach, according to Wong, allows for shorter and more productive team meetings.
“Scheduling shorter and more frequent team meetings focusing on particular issues has shown to be more efficient than two-hour meetings with many people.”
However, it is not only the duration of meetings that had to be adjusted to increase productivity, but also business hours. As international teams and standard-setting boards work in different time zones, says Jui, it is challenging.
“Previously we held board meetings in New York with 18 board members and 18 technical advisers in the same room. Now we are spread over 18 time zones. That doesn’t allow us to have continuous meetings. So, we have to break those meetings up to accommodate the schedules of board members.”
Wong adds that when working from home, there are certainly fewer distractions compared to working in the office.
“It opens up the possibility for people to take more time to look at things. However, productivity is dependent on the nature of the work. Virtual meetings are good for problem targeting but not so good for discussions.”
COVID-19 accelerates digital adoption
COVID-19 has accelerated the migration to digital technologies at a spectacular scale and speed.
“From now on ‘digital’ will play an important role,” says Hucklesby. “At Grant Thornton, we were in the process of fully deploying Office 365 and all COVID-19 has done is accelerate the deployment of that software in a way that, upon reflection, has been quite impressive.”
As opposed to the previous norm of many months or even years to implement new technologies, organisations have had to meet an ambitious digital agenda and transform quickly – within weeks or even days – to make sure their staff can work remotely.
“There will be a significant shift [as a result of COVID-19]. Business will realise that they must accelerate the development and employment of digital solutions,” says Steenkamp.
“Organisations know how to pilot new digital initiatives within a ‘normal’ timeframe, say 12 to 18 months, but very few do so at the speed suddenly required by COVID-19.”
Organisations often experiment at a pace that fails to match the speed of change. It’s not unusual that this slows their ability to learn fast enough to keep up with the technological advancement.
Now that COVID-19 forces customers, clients and employees into the digital world, organisations should ask themselves what digital actions to take, argues Steenkamp.
“If you don’t migrate everyone now you lose your productivity.”
Views expressed by External Reporting Centre of Excellence members are their own and do not necessarily reflect the views of their associated organisations.
Dr Jana Schmitz is Policy Research Analyst at CPA Australia. Ram Subramanian is Policy Adviser Financial Reporting at CPA Australia.